Economists against the FDA

Economists against the FDA

Article excerpt

A sulfa drug called Elixir Sulfanilamide released in 1937 killed over 100 Americans, mostly children. A sedative called Thalidomide released in Europe in 1957 and taken by pregnant women caused deformities in 10,000 children. These famous episodes strike us as horrible injustices that must be prevented.

But more deadly are quack platitudes that guide public policy. Platitudes such as "safety," "consumer protection," and "imperfect information" have paved the way for a government stranglehold on the pharmaceutical industry. The Food and Drug Administration (FDA) decides whether to permit a company to manufacture and sell a drug or medical device and what the company may say about it.

In medical matters, expertise and good sense should decide. In policy matters, expertise and good sense also should decide-but they do not. The issue here is one of economic policy, not medicine. The true "doctors" for drug policy are the political economists. But as economist John Calfee says, "the FDA has never sought to accumulate expertise in economics."' Quacks make policy against the doctors' orders.

Many economists have studied the FDA. Their diagnosis is well expressed by Nobel-- winning economist Milton Friedman: "The FDA has done enormous harm to the health of the American public by greatly increasing the costs of pharmaceutical research, thereby reducing the supply of new and effective drugs, and by delaying the approval of such drugs as survive the tortuous FDA process.."2 Other economists' prescriptions regarding the FDA are uniformly libertarian, ranging from gradual decontrol to outright abolition of the agency (as Friedman recommends). Although one can occasionally find remarks by economists vaguely favoring government restrictions on health products, those are not the economists who have written on the FDA or provided serious argumentation.3 I have tried to survey all economists' writings on the FDA and have not been able to find a single instance of an economist defending the contemporary FDA or advocating tighter restrictions. Contrary to the joke about laying all the economists end to end, those who study the issue do reach a conclusion: Relax restrictions on drugs and devices.

But the good policy doctors are largely ignored. The result has been like a plague. Yet the journalists and educators have not explained it or its FDA origins. Economists and libertarians are up against a Goliath-the country's entire quack political culture.

Today men with risk of heart trouble know to take half an aspirin a day. By 1988 it was well established that aspirin greatly reduces the risk of myocardial occlusion. But for years the FDA forbade aspirin makers from advertising that fact (the FDA still significantly restricts advertising about it). The FDA surely killed tens, and quite possibly hundreds, of thousands of Americans by this restriction alone.4

The drug delays we can list, taken together, are just the tip of the iceberg. A 1987 study catalogued 192 generic and 1,535 brand-name tested drugs available abroad but not approved in the United States. Of the drugs approved by the FDA between 1987 and 1993, fully 73 percent had already been approved abroad.b And because the FDA process is so expensive, so protracted, and so uncertain, thousands of untold drugs are never discovered or developed. It is impossible to estimate the suffering and death caused, but surely it greatly exceeds 50,000 premature deaths annually.